Linea Directa 200 LEFT COL CAR INSURANCE

PROPERTY SEARCH

Date Published: 15/10/2021

ARCHIVED - Spain introduces new tax laws from January 2022

ARCHIVED ARTICLE

Changes to Spanish property wealth taxes will impact all real estate transactions from next year

<span style='color:#780948'>ARCHIVED</span> - Spain introduces new tax laws from January 2022

New rules to prevent tax evasion in Spain are coming into force at the beginning of next year, just as more news is coming out about wealthy Spaniards cheating the Treasury with offshore accounts. Law 11/2021 follows on from a European directive of July 2016 which establishes rules against tax evasion, and includes a series of measures to counter tax fraud.

This law will come into force on January 1 2022, and aims to integrate European measures and strengthen tax audits. The law specifies that taxpayers with significant assets should be brought under control more to make sure they pay their taxes properly. A central coordination unit will be created to control these actions.

How do the new tax changes affect property owners?

The main change is that there will be a new calculation method that will apply to all real estate transactions, including inheritance and donations through a last will and testament.

This calculation method is based on the reference value, which will be determined by the General Directorate of Spanish Cadastre (‘catastro’). The sales prices of all property transactions made before a notary in Spain will be analysed on the basis of the cadastral characteristics of each property, that is, what is recorded in the land registry.

This reference value will have a direct impact on taxes. It affects existing property taxes (ITP), wealth tax, inheritance and donation. If the reference value is higher than the buying price, the tax rate will increase. The hope is that by fixing the tax rate to a real reference value, it will be harder for property magnates to cheat the tax authorities.

The Spanish property market

The real estate market in Spain has been steadily recovering from the coronavirus pandemic, with the number of sales and property prices slowly creeping back up. Now is a good time to invest in getting on the Spanish property ladder as further price increases are forecast in the coming years.

Meanwhile, the government has introduced a new Housing Law that will put a cap on rental prices to discourage big property cabals from monopolising the market, and to help young people occupy some of the country’s many empty apartments. However, critics say the proposed rules will damage the Spanish economy and there will be less investment in real estate in the country.

Image: Archive